AMD moving forward with 5-year model

Wolfgang Gruener of TG Daily recently had the opportunity to ask some difficult questions of AMD's Chief Technology Officer, Phil Hester. Hester is the man responsible for the big decisions relating to processor direction, industry analysis, and AMD's response/leadership in those areas. The decisions coming from his office affect all of AMD's operations.

Gruener asks some very interesting questions in this interview, and we hear some revealing answers. The most revealing answer was a summation of his response indicating one thing: AMD is currently working on a 5-year plan to reshape the marketplace, not only for consumers but also even for Intel. He believes very strongly that the current business model the company has in place is not only sustainable, but also is the correct one and will win out in the end.

Those are amazing summations given AMD's current position of lesser products, no real hope on the horizon, Intel's 45 nm HiK dielectrics–claiming 10x less leakage, thereby producing greater clock speeds, less heat, and lower power consumption–just around the corner, and I'm talking in 2008.

The article is very enlightening and anyone looking to get a glimpse inside the mind of AMD would be well served to read it. My favorite line: “Consumers don't buy nanometers,” referring to Intel's upcoming 45 nm technology versus AMD's 65 nm technology.

ummm(9:25am EST Fri May 18 2007)What i see is a lot of Intel bashing there and saving face. Bottom line. Read between the lines. AMD is being humilated day in and day out. – by Alan

PR(10:36am EST Fri May 18 2007)This does look like its primary purpose was PR. A 5-year plan, a roadmap, all sound rather like cliches these days. – by fdc

Consumers don't buy nanometers(11:03am EST Fri May 18 2007)True enough. But consumers do buy the products that have characteristics and features that are dictated by nanometers. Consumers buy processors that are faster and cooler, because they dissipate fewer watts. Their laptop batteries last longer. Their server rooms run cooler and cheaper. Their devices are smaller. And on, an on, and on.

Saying “consumers don't buy nanometers” sounds a lot like rationalation. They are way behind in process technology, so therefore process technology isn't important. It also sounds a lot like a familiar refrain from AMD. Tout the advantages of something for as long as you are ahead in it. But proclaim it to be wrongheaded thinking when you are behind. Remember AMD crowing from the mountaintops when they were kicking Intel's collective butts on benchmarks? Now that the benchmarks are in Intel's favor we hear AMD proclaiming that benchmarks don't matter. And when “consumers” declare that benchmarks DO matter, AMD proclaims that Intel is rigging its benchmarks. And when “consumers” declare that they can reproduce Intel's numbers with their own benchmarks, AMD proclaims that they are using the wrong benchmarks. And when AMD falls behind in process technology, and can't get 65 nm out the door before Intel ramps to 45 nm, we have AMD proclaiming that process nodes don't matter.

Different day, same song. And it sounds a lot like the song being sung by the proverbial fat lady. – by Olmy

Cliche?…(11:03am EST Fri May 18 2007)I don't really think it is all that cliche to have and hold forth a rational 5 year plan.

Unspoken – but certainly much talked about and batted around – is that for most of the market, performance increases don't actually matter significantly to the man on the street. Laptop #5, like #4, #3, #2 and yes, old #1 … suffers from pathologically inept disk performance, an absurd operating system's lunk-headed view of multitasking, wanton memory demand from fvckin' near-freeware happy-happy-joy-joy applications (that I'd never have, save that certain clients require them for some pointless 'client-is-always-right' purpose), and of course the perennial favorite, 'communications', related, be it antivirus filtering, VPN firewalling, antispam wanking, browser ooooh-youze-gonna-luv-this Java cowpies.

No. The processor hardly figures into it anymore. Due entirely to that 'wanton memory footprint' that I cited, we are essentially forced every couple of years to buy the next replacement (not that I mind a nice bright new screen, a clearer picture, and initially reasonable peppiness). But my expectations are that it will just be clean, peppier, relatively trouble free for awhile, reasonably self-protecting, and certainly not chock-full of gremlins, AdWare, gotchas, pop-ups, and banal “I'm going to Save You!” programs.

So where really is the meat in AMD's 5 year plan? I didn't read one. If they really are talking up a good story, it cannot be simply about repeating the word, “competing” over and over again.

I would have at least expected something (necessarily wishy-washy) along the lines of, “the path is anything but obvious, yet the technologies that are in their infancy today which we aim to capitalize upon are massive parallelism, extraordinary on-chip communications architectures, the joining of complimentary specialized processing architectures (think 'graphics on board'), and further intense research in silicon quantum physics and spintronics advances”

Had I read that, I would have at least said, “Wow!”

As in Wow, they have a plan, which talks up the expected, but shows determination to bring to market stuff which really might prove more compelling than simply rubber-stamping their old designs endlessly.

That's what I had hoped to read. Unfortunately, Titanium Man didn't deliver anything except an endless citation of their competitiveness and (while good, still kind of 'has been') leadership.

– by GoatGuy

Wow…(11:04am EST Fri May 18 2007)I would say that AMD's board get a handle on their officers…

With the claims the CTO is making one would ask why AMD is not in more legal battles with Intel even as I write this.

” More and more they figured out that Itanium is a ditch. Obviously, they copied our 64-bit extensions. A lot of the work we have done on virtualization they copied. A lot of the work we have done on power efficiency they copied. By doing Torrenza, we forced them to do what is their version of that idea. We don’t know a whole lot about [their version] yet, but, in general, they soon will be copying the idea of co-processors. So, every major platform innovation we came out within the last two years, in one form or the other, they copied.”

“…But if Intel engages in business practices that may not allow fair and open competition, then there is no a serious problem not just for us, but the whole industry.”

“If you are a large and successful company and almost a monopoly in the industry, there will be a lot of inefficiencies in your company. Yes, they have more resources, but the question is: How effectively are those resources used?”

” Unfortunately, Intel has tried to portray nanometers as a single metric for competitiveness and that simply is not the case. If that was really true, why is it that Opteron outperformed Intel?”

I would like to see if AMD really knows what Intel might be working on in R/D…You figure that Intel can have many winners in R/D that never make it out and they could have even worked on everything AMD has yet decided to take their business model/Ideas another way. O well speculation by myself, yet it is a bit disconcerning to hear AMD saying stuff like this instead of building up its own products.

I think that the CTO should be better at holding his tongue instead of saying these snippy comments about their competitor. Yes he might be right, but it is not a good thing to piss off a much bigger company that can easily crush you with better tech [C2D is better hands down], More R/D, More product lines [allowing it to reduce prices in the products that directly compete with AMD and not lose as much revenue], More on hand cash, More manufacturing capacity, Better Scale [Higher output or efficiency],…just a whole bunch of more.

I do also like how they [AMD] seem to be living in the past – “The world has become different with the success of our Opteron processor. Going forward, I believe there is a large opportunity for us on the consumer side of graphics. Overall, we feel very good about our manufacturing capabilities and we feel good about our new designs.” – Seems they have a feel good approach to designs and are still riding the coats tails of the Opy. I would suggest to them to stop thinking about the success with the Opy, and realize that their current designs are losing significantly to products [both from Nvidia and Intel] that are going to be replaced soon with better products.

O well I think AMD's plan for the Fusion is a no brainer and it has been cmoing for a while now. I also think that Intel has most likely had a similar product vision in a sector of R/D aswell, yet they dont talk about it like AMD does theirs. This means any product that is even close to the Fusion will most likely be look at as Intel copying AMD when this might not be the case at all. AMD of course will claim this and Intel will be the bigger CPU make not get into a 'Nuhu – I did not copy you, Yes you do' battle.

O well just my thoughts, no real proof just I just have an insight to other R/D of large companies and can tell you they work on a lot of the same things without even knowing they are.

Oh – My favorite line is “Customers don’t buy nanometers.” – No Shit Sherlock but at this scale you increase your production and thus your economics greatly, as well as power consumption, performance, etc.

Oh – My second Favorite line is “You can end up with the worst cost structure in the new technology, if your yields are poor to begin with.”Is this an insight to that AMD had or is having some yield issues? Sounds like it to me. – by asdfasdfasd

AMD is finished(3:01pm EST Fri May 18 2007)How can a company that will be BK in 2 years make a 5 year plan? – by squirrelzipper

Hmmm(3:46pm EST Fri May 18 2007)Well, in all fairness, it's a bit silly to critique a company that says

'Customers don’t buy nanometers.'

And also

'You can end up with the worst cost structure in the new technology, if your yields are poor to begin with.'

AMD have to make the decision that is closest to perfect for them, especially at this point in time.

They haven't got much to play with, except large orders to fill. If the cost of producing chips at 65nm is more viable than at 45nm, then good.

Obviously this is the case, as AMD haven't skipped a whole process (like go from 90nm straight to 45).

So i guess my point is, sometimes it's more economical to wait for something to mature before you are the first kid on the block to use it.

– by Headley

this is a bedtime story(7:02pm EST Fri May 18 2007)told by a CTO who may very well likely not be there much past the next corporate re-org.

You know, the one that most failing company's have in a last ditch effort to save themselves.

AMD may very well survive, but I seriously doubt many of their current management staff all make the trip. The stockholders will soon be screaming for blood and they will get it.

The first blood drawn will likely be the CEO (Ruis) and the CTO (this guy being quoted).

Wait and see… – by EE92

5 year plan.. Hester you don't even got a year..(8:50pm EST Fri May 18 2007)What a joke when they talk 5 years. The don't have a plan that will enable survival for 2 years let along five. The board must be asleep or bribed by the senior managment. Lets look at some delusional lines from the interview…

” We are in a very competitive position” Say what, you lost 5% MS, your products suck, you droped prices by 50%. You lost a billion dollars in the past 6 months, you're billions in debt with no real chance of returning to profitbility. INTEL has 45nm ramping this year with two new products lines in the next 12 months that you only can assume are as incremental as C2D was to Yonah. WTF are you think? It was arrogance while you were ahead that got you in trouble and you are still arrogant and so sure and putting down your competitor. Get with it they just crushed you and you still think you are very competitive.

Let me be clear. I fully expect Barcebalogna other wise known as “Phenom” ( another fine example of poor marketing and forward thinking naming ) to be fast and rule all the high end benchmarks ( when it finally gets here ). But it, and its new Mobile platform are simply not going to return AMD to profitiablity. Wihtout profits, without accelerated technology, without marketshare its a busted business model!!! Talk about total lack of any understanding of the competitive landscape or appreciating what your larger competitor could do.

“there ought to be a horse race back and forth between two strong competitors” Does AMD senior executives really believe just being in the x86 business is a birth right and that as such they are somehow entitled. Actually I'm shocked that Hester thinks he can be competitive. The board really needs to yank Hector and the senior managment if they really think this. I'm glad I sold all my AMD in the high 20's. Also it was a nice ride from 13 to 15 too!

” not a reaction to any short term platform issue” No.. not at all. A platform requires tight control of chipset, graphics and IO. AMD had none, now they do. Not at all about platform capability. DOes he really think geeks are that stupid. Financial analysts we already know about them might by this spin. ATI was always about the platform… to bad AMD had neither the money nor the resources to dedicate to it then nor does it have it now.

” Yes they have more resources, but the questoin is: How effectively are those resoures being used” Look at the balance sheet and gross margins. AFter accounting for the various side disasters at INTEL did Phil forget to notice INTEL is making billions of dollars. That sounds pretty effective. Could it be more effective? Yeah. He should stop criticizing why INTEL isn't making more money and figure out how he can get AMD back to reality. its funny his house is so screwup his only response is to try and get people focused on someone elses business so nobody wil notice how screwed up AMD is.

” Consumers should not see any functional differences between todays discrete CPU/GPU and solutions from fusion” DId he just say that? What a double stupid response, he is both right ( then he wasted the ATI buy ) and wrong. Talk about a technologist that is totally lost.

“You can end up wiht the worst cost structure in the new technology, if your yields are poor to begin with” LOL, must be speaking from personal experience. Sorry same area yield on a new technology is just a crushing advantage. Double the density / die, lower power, high performance, lower cost. Its no wonder AMD is late to the technology party. He is pretty much admitting they don't see the compelling advantage as they suffer thru poor yields and little return for having crappy technology.

If you weren't convinced AMD was finished before just re-read each question and the technologists answer. They sound as silly and out of reality as INTELs were the past few years. The difference is INTEL had billions and inertia to survive. AMD has NONE. It is very scary that AMD leaders are so myopic in their thinking about their situation they will ruin what is left of a very good design team.

AMD is finished..

– by rocco

5-Year Plan?(9:33pm EST Fri May 18 2007)

The last people to use 5-year plans were the Soviets – it sure worked out well for them. My guess is AMD management sees the writing on the wall and is in the pump-and-dump mode for their company stock. Smart to sell while it’s still worth something. – by Dean2

ummm(10:54pm EST Fri May 18 2007)rocco and Dean……….I agree with you ! – by Alan

Consumers don't buy nanometers?(3:24am EST Sat May 19 2007)One of those quotes that sounds good to the fans and makes them all feel good and warm inside. A call to arms, perhaps. A sense of unity, the same goal. AMD sure is good at creating punchlines lately. Newsflash guys: consumers don't buy nanometers, but they sure as heck don't buy pretty powerpoints or roadmaps either. They buy chips: make some. – by RandDguy

A competent interviewer would push for more details about the competitiveness and timing of AMD's products (this year not five years). But I don't think that was his agenda. It was to stick to cliche questions, which ultimately draw the same responses. – by fdc

Distinguishing(10:21am EST Sat May 19 2007)I dont find Hester's comments that satisfactory either, but I think one needs to distinguish a spokesman from a company and a company from the technology that it is using. – by fdc

E.g. AMD attack(10:36am EST Sat May 19 2007)I can easily distill that the attacks against AMD are generally attacks against the executive management (rather than against all the AMD employees or the 65 nm technology).

I think they are less frequent, and are generally a collection of smaller scale topics such as (no particular order and probably not inclusive enough):

1. Why is there still an Itanium2. Pentium 4 is so hot (in terms of wattage)3. Intel's dominance stifles the industry4. Why is (any particular executive) an idiot5. Why is Intel following AMD into 64-bit multicore?

#4 is definitely out of place here. Again can consider going to the stock boards for that one. #3 also seems like a flame thrower. – by fdc